Home Analysis ‘Britflix’: why the BBC wants to experiment with SVOD

‘Britflix’: why the BBC wants to experiment with SVOD

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Ever since the UK’s Department for Culture, Media and Sport published a White Paper on the BBC’s future in May, there has been much speculation about the possibility that the Corporation might team up with commercial broadcaster ITV to launch a UK version of Netflix, inevitably dubbed ‘Britflix’.

There appear to be two sources for the story: first, the White Paper includes the statements that (a) the BBC’s new charter will “empower the BBC to pilot some elements of subscription in addition to their current services”; and (b) that “the BBC has committed to consider and explore whether elements of subscription have a role to play alongside the core licence fee model in its future funding.”

The second source is an exclusive in the Daily Telegraph, in which the culture secretary, John Whittingdale, suggested it was the BBC that had requested the power to experiment with subscription payments, rather than the government; and in which the paper reported that the Corporation was understood to be working on a new online service delivered over the iPlayer alongside ITV, possibly in tandem with other TV companies.

It is fair to say that the Telegraph’s story was greeted with considerable scepticism in some quarters, as illustrated by The Register’s headline four days later: “BBC’s Britflix likely dead before the ink has even dried on the news.”

The author of the accompanying article reasoned, among other things, that “if the BBC makes too much money from outside the licence fee, it will get less public money voted to it in its next review, making it a zero-sum game.”

So, what substance, if any, is there to the story?

William Cooper, of the internet television and video consultancy informitv – who was previously the BBC’s Head of New Media Operations – notes that the BBC “already has a joint venture with ITV in the form of Freesat.”

Cooper’s point is presumably that the two broadcasters are already co-operating over the running of one joint service, so it’s not out of the question that they could join forces for another. But it’s probably also worth noting that while Freesat currently prides itself on providing “subscription-free satellite telly”, it does nevertheless integrate a broadband return-path with access to the iPlayer service, and could conceivably provide a suitable technical platform for any Britflix-type SVOD trial.

However, adds Cooper, “previous efforts by British broadcasters to develop online subscription services do not seem to have delivered significant revenues,” pointing out that “the BBC abandoned its previous Global iPlayer pilot.” This charged users subscription fees to watch programmes via an iPlayer-type app in Western Europe, Australia and Canada, but proved short-lived, with the BBC closing it down just over a year ago.

This underlines the fact that the challenge for legacy broadcasters such as the BBC and ITV is “to make a meaningful contribution to the bottom line through online services compared to their existing income,” says Cooper, citing the fact that the BBC’s commercial division, BBC Worldwide, “generates around £226 million a year for the BBC from its entire commercial operations globally, compared to licence fee income of £3,735 million.”

Steve Hewlett, a writer, broadcaster and media consultant who currently fronts BBC Radio Four’s The Media Show, believes the BBC is nevertheless currently working on some kind of SVOD offer, regardless of whether it involves ITV or not.

He points to the BBC Store, the online portal where viewers can download-to-own digital copies of BBC programmes. These range from shows the day after they are shown to items deep within its archive. “If you were launching a service like that you would almost certainly have subscription options, as well as one-off payments, so they’re definitely working on that, I’m sure of it,” he declares.

However, he adds, “they’ll run a mile from anything that smells of subscription around their central licence fee-funded proposition. So I don’t expect to see BBC services available by subscription – other than archive Netflix-type sales and access to content outside the iPlayer window.”

So why then has the BBC reportedly asked the government for permission to experiment with subscription funding?

Hewlett observes that while stakeholders generally believe that the BBC licence fee is safe “for the next 10 years or so”, they cannot predict where the market will be at the end of that period, so they are “quite sensibly opening questions about whether subscription might form a more substantial part of the BBC’s revenue mix as time goes on.”

Although Hewlett believes there are strong arguments against funding the Corporation by subscription, he nevertheless argues that the last two licence-fee settlements, which both featured what he described as Government “raids” on the BBC’s revenues, could not have happened if the Corporation had been subscription-funded: “the government treating this money as its own is outrageous, but nevertheless arises directly from the fact that it’s a licence fee. If it were a subscription income, it wouldn’t be as easy for the government to do that.”

In this environment, “the BBC would quite like the freedom to experiment to see what’s what,” says Hewlett. One example is the government’s proposal in the BBC White Paper to close the so-called ‘iPlayer loophole’ – whereby those who currently only view BBC programmes in on-demand mode (viz. through the iPlayer) are not required to pay the BBC licence fee.

The obvious way for the BBC to implement that request, suggests Hewlett, would be to add a conditional access system to the iPlayer such that it would only allow viewers to use it if they had paid their licence fee. “Now the BBC are actively looking at that, but their worry about it is it runs the risk of moving very close to subscription for their mainstream services.”

Such risks could be defused if the BBC were in control of such initiatives, rather than having them foisted on it by the government – hence its pro-active approach to subscription in the White Paper, he reasons.

“They want to ring-fence the wording around those things that might be called experiments, so that it doesn’t infect the main proposition for the licence fee and the mainstream services,” says Hewlett. “If you don’t do it yourself, someone will do it to you – and you won’t be able to control it.”

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